IBM to ‘Zipper’ Server, Chip Units

IBM Thursday said it will merge its server group and microelectronics division into one entity to better fulfill such business objectives as spreading the sphere of its POWER processor architecture over the market.

The new group will officially be called the Systems and Technology Group, and will be co-headed by senior vice president for technology John Kelly and senior vice president for systems William Zeitler. IBM will bundle the two groups’ fiscal results together, but will still provide a break out for the technology group’s sales.

Jim Larkin, spokesman for the Armonk, N.Y. company, described the maneuver as a kind of “zippering,” of two groups already working very closely together with increasingly mutual business objectives.

“The core proposition of the Systems and Technology group remains the same: deliver the best systems in the world to our customers, and to deliver the best microprocessors in the world,” Larkin told internetnews.com.

Larkin confirmed that those objectives include an increased emphasis on the company’s POWER chip architecture, which is used in anything from devices that require embedded systems, such as Microsoft’s Xbox gaming console, to IBM blade servers and UNIX servers.

IBM has been dwelling on POWER of late, making
it an integral part of its news at LinuxWorld in New York City last week.
Earlier, IBM made news by taking POWER on Linux to its blade servers.

The flexibility of the POWER architecture, Sageza Research Director Charles King told internetnews.com, makes it extremely attractive to a wide range customers in both makers of consumer electronics and customers who require enterprise-class servers to pipe computing resources to their PCs.

“It’s an interesting strategic move on their part,” King said. “2003 was the year of Itanium, so maybe 2004 will be the year of POWER. You get the sense that POWER really represents the elemental push that IBM has made in the server group and other product lines. This allows IBM to strategically align and make sure the same message is being vetted by the same people.”

Larkin said IBM would look to advance its POWER architecture as pervasively as possible through the new group and will continue to sell to customers who need advanced chips. “Increasingly, POWER is finding its way into new arenas and we feel it will be a very strong business move moving forward.”

Larkin said IBM is especially excited about the potential the POWER 5 chip, due by year’s end, holds. Expected to boast 3.5 to four times the performance of the current POWER 4, the architecture is geared to grant “unprecedented breakthroughs” in virtualization capabilities, which give users the ability to pool resources from a variety of servers and access them through one machine.

This is directly on par with IBM’s goal of increasing the depth of it’s e-business on-demand strategy for giving customers the power to be fed computing resources at the touch of a button as they are required on the fly.

With so much interest and investment in developing POWER, should Intel feel left out? No, Larkin said. While IBM is bullish on POWER, Larkin said it is not as though the “two architectures are going after each other” and noted that different architectures will appeal to different sets of customers around the world.

“We have a very healthy Intel server business,” Larkin said, referring to the company’s Xseries line.

IBM recently posted fourth quarter 2003 earnings, noting that total Systems Group revenues were $4.9 billion, up 18 percent year-over-year.